A late goal from Mathias Janisch condemned the Irish to defeat and O'Neill was quick to question the effort of some of his players shortly after the final whistle.
"The performance was unacceptable, the energy and work rate was not at the level required," O'Neill told reporters.
"It's okay lifting it for Portugal and Russia but we needed that tonight. When we're down gears we're average.
"In these games when we're expected to win, we need to bring the basic ingredients to win a football match."
Northern Ireland are fourth in Group F, six points behind Israel.